Pacific Oak REITs Negotiate Potential Merger
Pacific Oak Strategic Opportunity REIT Inc. and Pacific Oak Strategic Opportunity REIT II Inc. are currently negotiating a proposed merger and plan to execute a definitive agreement next month.
The special committees of Pacific Oak Strategic Opportunity REIT Inc. and Pacific Oak Strategic Opportunity REIT II Inc., two publicly registered non-traded REITs formerly known as KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II, are currently negotiating a proposed merger of the REITs and plan to execute a definitive agreement next month, according to a filing with Securities and Exchange Commission.
If approved, Pacific Oak Strategic Opportunity REIT II would merge into a subsidiary of Pacific Oak Strategic Opportunity REIT, which would be the surviving company.
The exclusive negotiation period will last until a definitive agreement is reached or March 1, 2020 and will be automatically extended for additional 30-day periods unless terminated by either party.
According to the filing, the REITs are disclosing this information now, before a merger agreement has been approved and signed, so that it can be shared by Pacific Oak Strategic Opportunity REIT with potential offshore investors.
Yesterday, The DI Wire reported that Pacific Oak Strategic Opportunity REIT registered a $1 billion offering as a net asset value-based perpetual life REIT.
Pacific Oak Capital Advisors replaced KBS Capital Advisors as the new external advisor of the two REITs late last year. Pacific Oak is part of a group of companies formed, owned and managed by Keith D. Hall and Peter McMillan III, two of the co-founders of KBS Capital Advisors LLC.
Pacific Oak Strategic Opportunity REIT launched its initial public offering in November 2009 and has raised approximately $638 million in investor equity from the offering and its distribution reimbursement plan, as of the third quarter 2019. In November 2019, the REIT completed a merger with Reven Housing REIT Inc. (NASDAQ: RVEN), a publicly traded REIT, for approximately $56.6 million in cash, or $5.13 per share of Reven common stock.
The company oversees a $1.1 billion real estate portfolio comprised of 11 properties, as well as four investments in real estate equity securities valued at $79.1 million, as of September 30, 2019. The company also holds $219.2 million in unconsolidated joint ventures, and has other assets totaling $119 million.
Pacific Oak Strategic Opportunity REIT II launched in August 2014, and through a private placement offering and a subsequent initial public offering, raised a total of $270 million in investor equity as of the third quarter of 2019, including distribution reinvestment shares. The REIT closed its primary offering in September 2018. Pacific Oak Strategic Opportunity REIT II oversees a $507.4 million portfolio of real estate assets and $9.8 million in real estate equity securities.
